The U.S. lifetime birth rate per woman is 1.78 — down from 2.12 in 2007 and below the pace needed to sustain the national population without significant net immigration. Annual population and labor force growth rate has fallen to about 0.5%, as the Trump administration has pushed down net immigration by more than 40% since 2016.
Now, a protracted, deep recession instigated by the coronavirus will likely push down the birth rate further.
In 2018, the Social Security Administration began paying more benefits than it received in payroll taxes. The pension fund is expected to run out by 2035 and for Medicare much sooner.
The ratio of working-age Americans to seniors has fallen from 5 in early 1980s to 3.6 this year, and it is likely to drop to 2.8 by the time the well runs dry. After that the Social Security Administration is on a pay-as-you-go basis. Either working Americans will have to pay dramatically higher payroll taxes or benefits will be radically cut.
Already, the United States offers one of the lowest Social Security pensions among advanced industrialized nations. From those pensions, our seniors likely pay more for health care through Medicare premiums and supplemental policies than in advanced European nations with universal coverage systems.
The ability of the working-age population to keep up — never mind more adequately support the elderly — is determined by the pace of economic growth. Thanks to slower productivity and labor-force growth, potential economic growth has fallen to less than 2% from 3.5% in the decades before the financial crisis.
Looking around, the pace of innovation has never been more exciting, but businesses have been too slow to absorb new technology to improve worker productivity. An aging workforce will always confront businesses with skill shortages and training costs, and the pace of increase in available workers inevitably follows down birth rates and tighter restrictions on immigration.
Challenges from Russia and China — plus instability in the Middle East and North Africa that will grow as the petroleum age phases down — have stretched the U.S. military, especially the Navy, to the limit. We already spend 3.3% of GDP on defense — and the Europeans and Japanese simply won’t or can’t do much more.
Two percent growth won’t permit the resources needed to counter the growing influence of autocratic regimes willing to shortchange social services and risk public health — as the recent coronavirus in China demonstrated — to make mischief even in far off places like Latin America.
Immigration is a hot-button issue throughout the industrialized world. That’s why populist movements are gaining so much momentum in Europe, Brexit happened and President Trump was elected. However, most of the voter angst is concentrated in blue-collar communities bearing job losses from automation and tougher international competition.
Well-educated immigrants tend to settle in fast-growing coastal cities and university-supported technology centers, where they pose fewer perceived threats. Immigration policy must shift from extended-family reunification and a lottery to one that places more emphasis on highly skilled workers.
Still, we need to reverse the declining birth rate. Liberals would like lots of federally funded family-friendly programs — guaranteed pre-K, paid family leave and the like. Europe has done all those, and its fertility rates are no better than ours.
Germany, France, Italy and the U.K. average 1.72.
Family allowances — annual payment for each child, which Germany generously offers up to the age of 25 — could help. That looks like a guaranteed annual income, which should be attractive to liberals. Such direct incentives should be appealing to conservatives too if we can agree more children are needed.
Vox identified 11 European countries with baby bounties. Comparing those to national fertility rates indicates little significant impact on birth rates.
Women with university educations marry and have first babies much later and fewer children. Having a second or third child is not nearly as attractive as putting more energy into a career and enjoying more independence from a male breadwinner.
What really must change is that women again see satisfaction in having more than two children — as some will always have fewer owing to premature death, unresolvable personal issues or infertility.
Peddling the idea that three children is the ideal is social dynamite no politician wants to touch, but our civilization needs more babies to survive.
Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.